"Today users have to tune their systems' I/O configuration to their applications, and that typically results in I/O bottlenecks down the road as demand grows," said Marek Piekarski, chief technology officer at VirtenSys."Our approach takes the I/O bottleneck out of the equation," he said.

"We remove all I/O adapters from servers, so they become just CPUs and memory and users can get two servers in a single 1U box," explained Piekarski. "By virtualizing the I/O in the switch, users can employ fewer adapter cards at higher utilization rates," he added.

The company provides both a rack-mounted switch and a blade-server module, either of which can handle I/O for up to 16 servers. They provide up to eight ports for any mix of 10 Gbit Ethernet and 8 Gbit Fibre Channel.

The startup is leverage two relatively new standards from the PCI Special Interest Group, a cabled version of the PCI Express interconnect and the specification for multi-root I/O virtualization (MR-IOV).

The cables provide one high bandwidth link between servers and the VirtenSys switch so the company can host adapters remote to the computer. The MR-IOV technology lets the startup provide multiple servers access to a single I/O adapter.

Express cables are specified for lengths up to seven meters. But users can employ active cables to stretch to 25 meters, Piekarski said.

The company's MR-IOV ASIC is a fairly straightforward implementation of the switch standard. What's more novel is the company's approach to the adapter side of virtualization.

"I/O card makers have little incentive to implement MR-IOV because if their adapters are shared with multiple servers their volumes go down, so they have been sitting on the fence," said Piekarski.

However, the adapter makers have had to support virtualization software from Citrix, VMware and others due to high user demand. VirtenSys has found ways to tap into that virtualization support by using on an FPGA firmware tailored to emulate each adapter maker's approach.

So far, it has focused on supporting the most popular Ethernet, Fibre Channel and SAS/SATA RAID adapters from Intel, LSI and Qlogic. However it claims it can quickly handle any adapter that supports virtualization.

VirtenSys is currently showing working silicon and pre-production rack and blade systems that it claims will be ready to ship in the fall. The current rack system supports just four adapters, but the company claims it can quickly build versions for eight adapters and will support up to 32 servers in the future.

Cisco Systems will be one of the chief competitors for the startup. Cisco has placed big bets on Fibre Channel over Ethernet (FCoE) technology in its Nexus system as a way to bring higher performance and lower costs to data center networks.

However, with the exception of the Cisco Nexus switch, other FCoE products announced in April were based on multiple off-the-shelf chips rather than optimized and integrated ASICs. "There are a lot of hurdles before FCoE makes much impact," said Piekarski.

VirtenSys will sell to OEMs rather than end users. It has evaluation systems in the hands of top tier server makers such as Hewlett-Packard.

The core design team, based in Manchester, England, was originally part of a telecom startup launched in 2000 to develop an interconnect fabric. The company was purchased, and the team later left to re-form as VirtenSys in late 2005 to apply its technology to data center products.

A year into the current startup, the company shifted its focus from silicon to systems. It opened a new location in Portland, Oregon, hiring server specialists from local offices of Intel Corp. there.

The company's new chief executive, Ahmet Houssein, joined in early 2007 and is a former business development and marketing executive with Intel's server group in Hillsboro.

VirtenSys raised a $12 million series A round in August 2006 from investors in the UK. It closed an $18 million series B in May 2008 which will provide funds through July, and it is now seeking to raise a series C round to last until it expects to break even sometime in 2010.

The company has been awarded 22 patents to date.